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Sorrento Therapeutics, Inc. Message Board

pktrade22 2 posts  |  Last Activity: May 17, 2014 9:41 PM Member since: Dec 19, 2013
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  • pktrade22 pktrade22 May 17, 2014 9:41 PM Flag

    The writing was on the wall for the RTX transfer for a long time. Look back at the press releases.

    The decline in the stock was driven by 4 things:

    1. Normal corrective market factors - The stock was hit by the pullback in Biotech, Small Caps, and the NASDAQ high fliers falling back to earth. Biotech stocks RGLS and PBYI are a couple others that really got hit too. So, it was a normal correction.

    2. They shopped the deal - They shopped the deal to institutions which correlates with the recent price action the last 2-3 weeks prior to the raise and especially the few days leading up to it. The "market" knew a raise was coming, at least the institutions did, because they met with management on the current road show in the past few weeks. The little guy gets screwed because they don't get the info til after the raise.

    3. Management not sticking to the plan and delivering milestones per their last raise. When mgmt changes the plan 7 months later the Street gets angry and rightfully so! They have a fantastic chance of getting approval with Cynviloq which will get them easily to a $800M-$1B+ market cap when approved. This is where the value is and once they get approved they can raise tons of money to fund other programs but they haven't "proven" themselves yet.

    4. A combo of investors not having faith in these new programs they raised money for (RTX and ADC/MonoC's) and mgmt looking to raise too much too fast. Think about it as I said in point 3 they changed their plan and expanded too fast without gaining Street Cred. The main issue here is these new platforms are money pits in Phase I at best which means they will need more money again in 18 months.

    The value is in Cynviloq, period!! That is why the Street is upset because they diluted investors for new programs that may or may not work. Cynviloq is worth the risk. The stock still has major long term value if Cynviloq delivers which it should. Mgmt must prioritize Cynivloq to regain confidence.

  • The issue isn't that they are running out of cash at all. The issue is they are trying to move too fast with what they have on their plate. They are determined to be a big biotech company which may or may not come to fruition. Their cash burn seems be in order but the Orphan status for the RTX drug came through and they rushed into raising money to fund that without much regard to the existing shareholders. They are in too much of a hurry to make it big. And, if Mgmt is listening slow the eff down and deliver on your current programs and Wall Street will reward you with a higher stock price and the money you need for future development programs. Henry, you need to deliver first not keep taking on more programs.

    If you look at the price action of the stock it had a normal correction with the rest of the biotech sector and the NASDAQ in general down to about the $10 area. What happened next is when they shopped the deal, the institutions they were talking to started selling their existing shares and/or shorting the stock knowing that more supply was forthcoming. I'm sure they leaked word to people as well. Shopping the deal most likely pushed the stock down from $9.50 area to $6.70 over the past 2 weeks. Then when they priced the deal because they were in such a hurry they had to do it at a hefty discount to get the money. A few take a ways here are it wasn't the right time to raise money, investors didn't like management's plan, and this deal should not have been done at this time.

    In short, very, very poor execution on management's part. What they should have done was allow the Orphan RTX news to hit the market as positive news bumping the stock up drawing more investors in. They should have then waited til the stock stabilized higher and waited for more favorable conditions and then raised the money for the RTX program. Management no doubt has a plan. The question is can they execute?! If they can then this stock will be great long term. Short term who knows...

    Sentiment: Buy

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